DISEASE CHARACTERISTICS:
* Histologically confirmed recurrent adenocarcinoma of the prostate within the past year
* No transitional cell, small cell, or squamous cell carcinoma of the prostate
* Local recurrence
* Disease recurred ≥ 18 months after completion of prior external beam radiotherapy or brachytherapy for stage T1-T3, N0/X, M0 disease
* Biochemical failure as defined by the Phoenix definition (rise in PSA by 2 ng/mL or more above the nadir PSA)
* PSA ≥ 0.3 ng/mL to \< 20 ng/mL measured within the past 30 days
* Pre-treatment PSA \< 50 ng/mL
* Prior locally recurrent hormone-refractory disease allowed
* American Urologic Association Obstructive Symptom Index Score ≤ 24
* No known standard therapy that is potentially curative or definitely capable of extending life expectancy
* No evidence of or history of metastatic adenocarcinoma of the prostate
* Negative radiographic metastatic work-up including whole-body radionuclide bone scan, CT and/or MR scan of the pelvis and abdomen, and chest x-ray
* Patients with suspicious areas on conventional imaging studies are eligible provided they are biopsy negative
* No known CNS metastases
* No prostate size \> 140 cc
PATIENT CHARACTERISTICS:
* ECOG performance status 0-2
* Life expectancy ≥ 12 weeks
* ANC ≥ 1,500/μL
* Platelet count ≥ 100,000/μL
* Hemoglobin ≥ 8.5 g/dL
* Total bilirubin ≤ 1.5 times upper limit of normal (ULN)
* INR ≤ 1.4 times ULN
* Creatinine ≤ 1.5 times ULN
* Thyroid-stimulating hormone 0.3-5.0 μIU/mL and free thyroxine 0.8-1.87 ng/dL
* Willing to provide biologic specimens and participate in imaging studies as required
* Willing to maintain a low-iodine diet for 12 days
* Starting 7 days prior to study virus injection continuing until study day 5
* No more than 1 of the following renal/genitourinary toxicities:
* Bladder spasms
* Dysuria (painful urination)
* Genitourinary fistula
* Hemoglobinuria
* Incontinence
* Operative injury to bladder and/or ureter
* Proteinuria
* Renal failure
* Uretal obstruction
* Urinary frequency/urgency
* Urinary retention
* Urine color change (not related to other dietary or physiologic cause \[e.g., bilirubin, concentrated urine, or hematuria\])
* Other renal/genitourinary toxicities
* No urinary tract infection within 72 hours prior to registration
* No pubic arch interference study demonstrating unacceptable prostate access by the transperineal approach
* No absence of rectum or other anatomic features that would preclude transperineal needle insertion into the prostate
* No coagulopathy that contraindicates transperineal and intraprostatic needle insertion
* No other cancer within the past 2 years, except for squamous cell and basal cell skin cancers
* No uncontrolled infection or fever \> 100°F
* No known cardiac disease
* No seizure disorder
* No documented history of HIV positivity or other acquired immunodeficiency disorder or congenital immunodeficiency disorder
PRIOR CONCURRENT THERAPY:
* See Disease Characteristics
* Recovered from acute, reversible effects of prior chemotherapy
* Androgen-deprivation therapy (if applicable) initiated more than 3 months prior to registration
* Patients who have undergone bilateral orchiectomy are eligible if they meet all other criteria
* At least 6 weeks since prior bicalutamide, nilutamide, or oral or intravenous iodinated contrast
* At least 4 weeks since prior chemotherapy (6 weeks for mitomycin C or nitrosoureas), immunotherapy, biologic therapy, or other experimental drugs
* At least 4 weeks since prior and no concurrent anti-androgens (e.g., flutamide, estrogens, ketoconazole, PC-SPES, finasteride, or megestrol acetate)
* At least 2 weeks since prior and no concurrent exogenous corticosteroids
* Patients clinically proven to require maintenance steroids allowed provided there has been no change in their dose within the past 6 weeks
* No antibiotic therapy within the past 72 hours
* No prior organ transplantation
* No prior salvage prostatectomy
* No other concurrent chemotherapy, immunotherapy, radiotherapy, or any ancillary therapy considered investigational
* No concurrent prophylactic use of colony-stimulating factors
* No concurrent enrollment in any other study involving a pharmacologic agent (drugs, biologics, immunotherapy approaches, gene therapy) whether for symptom control or therapeutic intent